N Chandrasekaran, managing director and chief executive, Tata Consultancy Services, does not want to use the phrase ‘cautiously optimistic’. After the third quarter numbers, he’s all the more bullish about the FY14 business environment. In a chat with Shivani Shinde, he spoke about client budgets and business drivers. Edited excerpts:
Volumes for this quarter were lower than the Street expectation. Is this a one-off?
If you look at the last few quarters, our volumes have been in the four to five per cent range. The December quarter traditionally has been a soft one and we had also said that this quarter, compared with the past, will be softer than normal.
So, a volume (rise) of 1.25 per cent is no surprise. Besides, we had unusual extended furloughs in two accounts, banking and finance.
I think this quarter was all about execution. We have executed very well on productivity, on utilisation — in a quarter which is traditionally slow —and also on financial management.
I have already said extended furloughs are over and most of the projects had started even before December was over. Rather, our volumes in the BFSI (banking, financial services and insurance) space were higher than the company average. It’s business as usual; you should see an uptick.
TCS has consistently said CY2013 will be a better year. What insights have clients shared with you in terms of IT budgets?
The budgets we go after today are much higher than the budgets we went after two years earlier. Our addressable space is continuously expanding. Every customer who is even spending less is driving productivity and efficiency — that means higher adoption of our business solutions and models. Second, our capabilities and investments in areas like digital technology are enabling us to participate in more deals. Our footprint from both a market point of view and services is expanding.
Where do you see clients spending the most in the coming quarters?
Every company, irrespective of what they are and where they are, wante to be efficient. This is driving opportunities for us.
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We see opportunity in infrastructure management, BPO (business process outsourcing), shared services. Clients want to leverage analytics and this is true for the consumer segment as much as for any other sector.
From the market’s point of view, we see growth across regions. The only problem area is telecom.
This quarter, the TCS large client bucket has gone up. Are large deals back on the table?
Digital technology-led deals are small but large deals are still coming in. Especially in the optimisation space, we see large deals. The pipeline is good. This quarter, we bagged deals from BFSI, retail and health care.
TCS (staff) attrition is at the lowest, utilisation is up and you continue to hire. How do you see your future hiring?
As much as we are focused on non-linear growth, we are equally focused on growth in our traditional business, as we still see growth. So, we will continue to hire.
Does this mean the TCS hiring mix will change?
We would like to maintain our hiring mix. If possible, increase the campus hiring ratio across geographies. We are hiring a lot of people in other geographies. In Latin America, we have 10,000 people. I think we should at least target 1,000-1,500 people from campuses. We would also hire more from campuses in the US, UK and Europe. It also allows us to then shape their career.
In the recent past, several news report in the international media have pointed to the trend of insourcing. Companies like General Motors, GE and Apple want to get some part of manufacturing back. Are clients expressing such demand in the services segment, too?
I think the overall mix of off-shoring and onsite will not change. At least in the medium term. We will continue to operate at the same mix. It is about how you execute deals. We will hire locally and we will send some people from here. What will be important is visa planning. More, we offer a global model. If clients want onshore, we will do that. We have onsite centres in the US, nearshore presence in Latin America and other geographies.
We can do global delivery or do time and material or a new business model. For us, the mantra is to stay relevant.